Section 151 of the Local Government Act 1972 requires every local authority in England and Wales to:

Make arrangements for the proper administration of their financial affairs and shall secure that one of their officers has responsibility for the administration of those affairs.

In England and Wales, this chief financial officer must be qualified through membership of a specified professional accountancy body.

The professional conduct case involved alleged inadequate reporting to a local authority by a CIPFA member appointed under the above statutory provision in circumstances where the authority’s financial position was precarious.

The Appeal Committee considered the member’s conduct against reporting and accountability mechanisms established under statute, common law principles and the principles set out in CIPFA’s Statement on the role of the finance director in local government.

Specific failures included giving inadequate information and/or advice on housing revenue account, council tax collection and housing benefits performance.

The committee specifically noted that they did not hold the member strictly, or vicariously, liable for the failure of others.

However, the committee had this to say in relation to the responsibilities of the Section 151 officer:

The holding of the position of Section 151 officer and [director of finance] is of great importance, both to the community which the officer serves, and for the reputation and standing of CIPFA itself.

The more serious the situation facing a local authority the more likely that failure to take appropriate action by a CIPFA member would reflect badly not only on the member but also on his professional body and his employer.

CIPFA guides are there to prevent failures and encourage good behaviour.

It is also important to appreciate that the Section 151 officer is the person to whom other CIPFA members in that member’s office would look to set the tone when pressure was applied. [The member’s] duties were owed not only to the council and his colleagues but also to the community as a whole.

Having found various breaches of CIPFA’s Bye-Law 23, the committee imposed a severe reprimand and a fine of £5,000 and commented in relation to the difficult circumstances encountered by the member:

We do, however, believe that a fine of this order is justified, given the nature of the breaches we have found, the position which [the member] held, and the problems facing [the authority] which required early and useful practical advice. Equally we have taken into account [relevant mitigation]…

However, we made it clear when we announced our decision that it is in cases where the political, managerial and financial situations are extremely difficult that a Section 151 officer is most likely to be called upon to act.